Digital Domain CEO: How We Can Still Save Visual-Effects Industry
Digital Domain CEO: We Can Still Save the Visual-Effects Industry
The visual-effects industry is in tumult.
Shrinking profit margins and studios' thirst for foreign subsidies have decimated the business, particularly in Southern California, and pushed more than a half-dozen companies into financial ruin in the last few years.
Last month, the Oscar-winning visual-effects company Rhythm & Hues became the latest victim of this fierce competition and was forced to file for Chapter 11 protection. Its failure has set off a period of intense soul-searching across the visual-effects community.
The sad saga of Rhythm & Hues is a story Ed Ulbrich (left) knows all too well. Having been with the visual-effects company since its inception in 1993, he was named chief executive officer of Digital Domain six months ago -- the same day it slid into bankruptcy.
As such, he helped orchestrate the sale of the company behind "Titanic" and "The Curious Case of Benjamin Button" for $30.2 million to the Indian conglomerate Reliance Group and the Chinese-owned media company Galloping Horse America.
Every flirtation with financial disaster is unique; in Digital Domain's case it had much to do with its parent company's poorly received public offering and push to expand into too many different directions, such as computer-graphic simulations for the military.
The experience left Ulbrich with a belief that the visual-effects business has profound structural problems that must be rectified. He talked to TheWrap about what he learned from the arduous experience of flirting with closing down a storied 20-year old brand, why he thinks that Digital Domain can reemerge even stronger and how the visual-effects industry can still be saved.
Do you feel that studios and their push for foreign subsidies are responsible for the issues in the industry? Studios are not the evil enemies ... it isn't the studios that's the problem, it's us. We have to rethink our business and align our interests with the filmmakers so we can participate in their success.
How do you propose companies like Digital Domain get rewarded if a film is a success? Clearly the global demand for this stuff is there. Forty-nine of the top 50 highest grossing movies are CG or animated movies. We need to stop acting like visual-effects vendors and start acting like digital production companies. That may mean convincing studios to pay us less, but instead [getting a stake] in the production, so if the movie is a hit, we get a chance to participate in its success.
It's a co-production model, and there's no question that studios are receptive. It helps them spread the risk. It's what we're doing on [Summit's upcoming science fiction film] "Ender's Game." What about the idea of forming a trade association? Many prominent figures in the industry, such as Digital Domain's former head Scott Ross, believe that's the best way to get a better deal. If you're looking to a trade association to save your business and tell you what to do, you're screwed. They can advocate and inform and come up with some best practices. Yes they can come up with a standard way of bidding, but that will only work to the extent that everyone accepts it.
Then there are issues of collusion. We can't all gang up on the studios and price-fix. I've been on boards of trade associations, and what trade associations do best is collective bargaining with unions. They help protect companies from unions and help with negotiating contracts. So if you really want there to be a trade association, there's nothing like a union to get one.